Internally Providing
Let’s say you’re on a team that is 100% focused on providing internal services. (Being on a team that is mostly internally focused, this isn’t completely hypothetical to me.)
Assume you have a relatively clear, shared vision; a fairly clear understanding of who will do what; you have talented people on the team with the right skills and a healthy culture; and everyone feels pretty motivated to pitch in, and even put in long hours when needed. In short, let’s assume you don’t need to worry about 4/5′s of the dimensions for the time being.
I want to focus on Knowledge Processes. What would you focus on, or what questions would you ask, if the following situations came up? I’ve put the “Andy thoughts” in white text below each one. These are by no means “the” answer–in fact, we’d love to hear and discuss your answers–but feel free to highlight the text with your mouse to reveal what I thought.
- One person on the team is excelling at providing services and getting new customers while others lag.
- [Keeping in mind we're just focusing on KP...] Perhaps setting up knowledge sharing or best-practices sharing meetings would help. Or have the team be involved in “post mortem” or “after-action report” debriefs of projects.
- We have a good problem: our customers love us, but we are swamped with requests and are falling behind.
- Perhaps, if your services are free to the customer, you are being over-used. Are there ways to introduces prices or other knowledge-sharing mechanisms (like challenge, billing work-hours to the customer’s department, signing ‘contracts’ that make the organization costs explicit)?
- Our customers seem to “put up with” or “tolerate” us as opposed to seeing us as a valuable service.
- Has the quality of our service slipped? How are we doing compared to the market, or to others who do similar types of activities. Can we benchmark and learn from others?
- Or, what expectations does our customer have? What steps have we made to understand them, and what steps have we made to clarify what we can/will deliver at a certain cost (in money or time)?
Feel free to share your answers or to bring up new questions you are experiencing.
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- Posted in Knowledge Processes
I’ve been thinking about what measures might replace a price mechanism. In this situation, there may not be a price to the customer. If you don’t charge for your services, how do you signal to your customers what the opportunity cost of your time is? Can anyone think of simple metrics that might help convey this knowledge?
I’ll use IT as a shared service as an example. Most of this service is directed internally to the business units. This makes an interesting model because most of the BU’s know what IT is costing them. This reminds me of a funny story – One of the jokes we had at a previous employer was that you couldn’t say “hi” in the hall to anyone from XYZ team because they would charge you $110.
In these cultures it is crucial to add a prioritization/governance layer to the service. And it is also important to share info on the value created by the service.
Prioritization/Governance:
Even though IT is an internal service, there is a real cost and a limited/scarce resource. The teams can only do X number of projects with the team members and the budget that they have. A prioritization/governance model is required to make the business units think through the requisition process – which projects are most important to the business? At a previous employer we had this model, with internal and external compliance project requests receiving highest priority and being guaranteed to be done first. Very large corporate initiatives, live implementing SAP or consolidating a datacenter came next. Once again, not optional. Everything else (which was significantly less resources and budget than we started with) was discretionary. Remaining projects needed to be prioritized by business need, customer need, etc. using a prioritization strategy.
Sharing value:
It is important to share with the business units the value created by the shared service. The prioritization process helps, but also show the value gained. This can be relatively easy with a discretonary project which will bring real value and ROI to the BU or a key customer. But it is not so easy to do with IT as an infrastructure (servers, datacenters, networks, etc).
And it is necessary, and difficult, to police the business so that they see the real value of IT as a shared service. There is always the temptation for the business to grumble about the cost, and try to “grow their own” IT embedded in the BU. This is because they forget the opportunity cost of buying that IT shared service.
@Scott Miller: That’s really interesting. Especially (a) how both market signals AND organizational priorities/strategies each influence the allocation of resources and (b) how “compliance” was a priority that helped determine business decisions, trumping short-term profit even, it seems.
The problem you mentioned about the trouble of showing the value of IT infrastructure to individual business units reminds me of a book I’m reading now–”The Not So Wild, Wild West.” It discusses how property rights evolved in the late 1800′s American West–how shared resources such as water rights and grazing land (not unlike shared IT resources) were transformed from tragedies of the commons to private property that was better utilized. It’s a pretty fun read, actually.
@AndyGillette: Another example demonstrating the challenges of perceived value in IT infrastructure is Nicholas Carr’s HBR article “IT Doesn’t Matter” and his book with the somewhat less inflammatory title “Does IT Matter? Information Technology and the Corrosion of Competitive Advantage”. In it Carr compares IT to energy and railroad infrastructure. No one cares about the lightbulb – they only care that it works.
A wise colleague of mine once said,”with infrastructure, the best customer attitude that you can hope for is ambivalence. When the network or server is down they really care. The rest of the time not so much.”